Honda joins $ 400 billion gold rush to monetize smart car data
TOKYO – Honda Motor has launched a new company that sells data generated by intelligent vehicles, joining a group of rivals in a new industry set to be worth up to $ 400 billion a year.
So-called connected cars are equipped with cameras, lasers and power plants that transform vehicles into mobile sensors. A variety of data can be collected, from driving distances and speeds to entertainment content played by vehicle occupants.
“For the automotive industry competing in the electrification of vehicles, converting operating data into a revenue stream is the top priority,” said Tomoki Hamano, senior business consultant at the Nomura Research Institute.
Honda, which has driving data on approximately 3.7 million vehicles, has started providing this data to commercial facilities and other customers. Honda started using the data in 2017. But the automaker had only transferred this data on a limited basis, for example to local government authorities seeking to locate suitable roads in the event of a disaster.
This time, Honda will devote more resources to customer development. In August, the automaker began providing information on driving conditions using electrical panels. The price of this offer is approximately 4 million yen ($ 36,000) per month.
Honda has partnered with location data startup Tokyo Nightley to analyze driver behavior for a fee. The data should be used to determine consumer demands, assess the effectiveness of advertising, and plan retail outlet openings. Monthly subscriptions start at 200,000 yen.
Toyota Motor has partnered with NTT Group to develop technology that controls the flow of traffic in an area after detecting traffic jams. Almost all new Toyota passenger cars sold in Japan and the United States since last year are connected. Now Toyota is building an infrastructure to use the data.
Toyota seeks to monetize data through collaborators, such as Uber Technologies. The leading automaker has previously worked with Japanese company Aioi Nissay Dowa Insurance to analyze driving data and offer discounts on auto insurance.
About 80% of all cars sold globally in 2035 will be connected vehicles, according to Tokyo-based market intelligence firm Fuji Keizai, amounting to 94.2 million vehicles per year.
Driving data will add an annual incremental value of $ 400 billion in 2030, that figure including additional service revenues, data sales and cost reduction, according to a report by New York business consulting firm McKinsey & Co.
On the other hand, “if you are unable to identify the data that is valuable, the costs of managing that data will outweigh its benefits,” said Yu Chiba of NTT Data.
Vehicle control data produced by 5 million connected cars in a single month amounts to 104 petabytes, according to NTT Data. That’s enough to fill over 4 million 25 gigabyte Blu-ray discs.
Adding camera footage and other data multiplies the volume over 100 times.
Wejo, a British startup backed by General Motors, operates a big data trading platform for connected cars. The company collects real-time data from automakers, then processes and delivers the information in ready-to-use formats.
An Israeli rival, Otonomo, operates a similar platform that BMW, Daimler and 14 other car makers have joined as sellers. There are over 100 data buyers, including those in the insurance, payments and advertising industries, as well as local governments.
Otonomo takes a 35% reduction in sales while automakers collect the rest.
BMW has joined the Otonomo platform to pave the way for commercial use of driving data. Its information is sold to insurance companies, app developers and others, and used in services that can notify drivers about open parking spaces nearby and warn of ice conditions, for example.
Japanese companies are also interested in data exchange.
Sompo Holdings is teaming up with Microsoft for a $ 25 million investment in Wejo that will give the insurer a single-digit stake. She plans to take advantage of this partnership to develop new business areas and insurance products. Mitsubishi Motors also plans to start selling data through Otonomo.
Otonomo went public in August through a merger with a specialist acquisition company, or SPAC, bringing in around $ 260 million which will be spent on developing the system and expanding its customer base.